In Year $4,$ Jordan Manufacturing discovered that $$4,500,000$ of depreciation expense was not

recorded in previous years.

Also, at the beginning of Year $4,$ the Company decided to change inventory methods from LIFO

to FIFO. The following information details the pretax income under LIFO and FIFO for Years $1-3$:

PRETAX INCOME UNDER

Year $1$

Year $2$

Year $3$

TOTAL

ADDITIONAL INFORMATION:

The Company's tax rate is $40\%$ for all years.

The reported Retained Earnings balance at the end of Year $3$ was $$6,300,000$

$($Pretax Income of $$10\mathrm{.}5$ million $x60\%$

Net income for Year $4$ was $$4,800,000.$

REQUIRED:

$1$ Calculate the required adjustment for the depreciation error and indicate how this

correction should be presented in the financial statements.

$2$ Calculate the cumulative adjustment for the change in principle and indicate how this

adjustment should be reported in the financial statements.

$3$ Prepare the statement of retained earnings for Year $4,$ assuming the following:

the CO is presenting financial statements for Year $4$ only.

$-$no dividends were declared in Years $1-3$

$-$$$400,000$ of cash dividends were declared on Common Stock in Year $4$